Market Overview

Week in FX Asia – The Kiwis Gave Us "The Hobbit" And Now An Expensive "Dollar"

While the Yen is getting battered against all currencies on the grounds that the Japanese government wants that to be so, the Kiwi is rallying. Governor Wheeler at the RBNZ has been the main catalyst for this appreciation. All week the market has heard hawkish comments come from his office.

On Wednesday, the RBNZ chose to leave the OCR unchanged at +2.5%. The Governor is bullish about New Zealand's economy, saying “economic indicators are improving here and with many of our trading partners” and “positive global sentiment is resulting in lower bank funding costs and reduction of credit costs for both households and firms alike.”

The Governor “does not want to see financial stability of inflation risks accentuated by housing demand getting too far ahead of supply.” The central banks' own analysis suggests that GDP growth is recovering, as business confidence and construction activity has picked up, while inflation is subdued due to �...

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